Correlation Between First Hotel and Taiwan Weighted
Can any of the company-specific risk be diversified away by investing in both First Hotel and Taiwan Weighted at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Hotel and Taiwan Weighted into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hotel Co and Taiwan Weighted, you can compare the effects of market volatilities on First Hotel and Taiwan Weighted and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Hotel with a short position of Taiwan Weighted. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Taiwan Weighted.
Diversification Opportunities for First Hotel and Taiwan Weighted
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Taiwan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and Taiwan Weighted in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Weighted and First Hotel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Hotel Co are associated (or correlated) with Taiwan Weighted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Weighted has no effect on the direction of First Hotel i.e., First Hotel and Taiwan Weighted go up and down completely randomly.
Pair Corralation between First Hotel and Taiwan Weighted
Assuming the 90 days trading horizon First Hotel Co is expected to generate 0.7 times more return on investment than Taiwan Weighted. However, First Hotel Co is 1.43 times less risky than Taiwan Weighted. It trades about 0.0 of its potential returns per unit of risk. Taiwan Weighted is currently generating about -0.05 per unit of risk. If you would invest 1,490 in First Hotel Co on August 28, 2024 and sell it today you would earn a total of 0.00 from holding First Hotel Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
First Hotel Co vs. Taiwan Weighted
Performance |
| Timeline |
First Hotel and Taiwan Weighted Volatility Contrast
Predicted Return Density |
| Returns |
First Hotel Co
Pair trading matchups for First Hotel
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Pair Trading with First Hotel and Taiwan Weighted
The main advantage of trading using opposite First Hotel and Taiwan Weighted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, Taiwan Weighted can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Taiwan Weighted will offset losses from the drop in Taiwan Weighted's long position.| First Hotel vs. Taiwan Semiconductor Manufacturing | First Hotel vs. Hon Hai Precision | First Hotel vs. MediaTek | First Hotel vs. Chunghwa Telecom Co |
| Taiwan Weighted vs. Taichung Commercial Bank | Taiwan Weighted vs. China Times Publishing | Taiwan Weighted vs. First Insurance Co | Taiwan Weighted vs. Mega Financial Holding |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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